Factors that contribute to the success or failure of an IT outsourcing project

Outsourcing software development projects is gaining high popularity due to many benefits related to this business strategy. However, before making a decision about outsourcing software development work, you should consider the factors that have an impact on the success or failure of the project.

Agnieszka Warżała
Agnieszka Warżała
Aug. 26, 202012 min read
Factors that contribute to the success or failure of an IT outsourcing project

What should be considered in software development outsourcing? 

Not only choosing the right service provider, whose experience and skills meet the project requirement, is crucial, but knowing the factors that have an impact on the outcome of the outsourcing project can help you effectively collaborate with external companies. What is more, the perception and attitude of both clients and suppliers are highly relevant in outsourcing projects.

The factors that contribute to the success of the outsourcing project are:

  • Communication between the client and the service provider, as well as inside the service provider team - is one of the most significant success factors. Open and transparent communication can help you build trust and establish business relationships with your partner to gain mutual benefits.
  • Working according to the transition plan - in order to effectively move the project from the implementation to the maintenance phase, the team should perform the tasks and activities included in the project transition plan.
  • Managing the business case for outsourcing - developing a business case for an outsourcing solution or initiative helps fully understand the short- and long-term advantages resulting from the outsourcing strategy. The business case allows evaluating the risks associated with the investment in an outsourcing initiative.
  • Demand management - the service provider usually takes over the managing functions in the outsourced projects. Proper planning of the demand for project coordination has an impact on the outcome of the outsourced project. 
  • Vendor’s empathy - it is the capability of the service provider to put himself in the position of his client. The understanding of the client's needs, demands, and resources help the service provider to better manage the project.

What has a negative impact on outsourcing software development projects?

Nevertheless, not all outsourcing projects are successful. One of the most common problems arising in the outsourcing projects are related to communication:  

  • Deferred replies - in the outsourcing projects, there is usually the location distance between the client and a vendor. Therefore, late replies to emails and deferred calls may interrupt the effectiveness of the teamwork and development process. 
  • Deficiency of casual correspondence that is occasional and controlled - lack of systematic communication with the service provider might result in a loss of control over the progress of work, as well as prolong the process of solving obstacles that would cause a delay in the project implementation
  • Non-recorded promises that are done amid videoconferencing or telephone conversation - the missing written summary of telephone or online calls between the customer and the service provider may lead to a conflict between the parties and failure to meet each other's expectations. 
  • Time zone - when one of the parties is located in another time zone, it seems to be problematic in terms of communication and collaboration. However, effective management allows you to work without any interference.
  • Cultural differences - cultural diversity between cooperating companies can sometimes affect the effectiveness of communication. Nevertheless, dispelling negative stereotypes and learning other cultures helps you understand different perspectives and brings a fresh perspective to your project and work environment. 

Despite communication issues, you can also come across other factors that can lead to the failure of the outsourcing project. On the graph are presented the top 10 issues depending on the frequency of occurrence:

Overall the success of the outsourcing strategy implementation can be improved with the knowledge of failure factors and their influences on complex projects. Therefore, it is highly recommended to consider all cases and put in an effort to mitigate the risk of project failure.

Agnieszka Warżała
written by
Agnieszka Warżała

Marketing manager who is detail-oriented, enthusiastic about data analysis, and highly focused on implementing modern solutions to help our business to grow. 

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